A 401(k) loan is an easy and cheap way to borrow, and although that may be enticing, it’s also an incredibly risky move.
These types of loans have incredibly low interest rates, meant to grab those seeking out a loan’s attention.
The Detroit News says, “If you stop your 401(k) contributions to repay the loan, borrowing $10,000 today could cost you $190,000, or $1,000 a month in lost future retirement income, if you’re in your 30s. If you’re in your 20s, the loss could double to $380,000, or $2,000 less a month for retirement.”
If you repay the loan, then you’re mostly fine. However, if you’re unable to do so, you’ll be hit with taxes, penalties, and lose your future retirement income.
Image The Motley Fool.
